(September 22 – 13:10 ET) – Royal Bank is selling its 33 non-branch, multi-tenant buildings to Oxford Properties Group Inc. and Ontario Municipal Employees Retirement System for $827 million, pre-tax. Under the terms of the sale, the bank will lease back from the purchasers all the space that it presently occupies in these buildings. The sale is to close by October 15, 1999.
The total package represents 4.9 million square feet of gross leaseable area in 33 office buildings, processing and operations centres across the country, with the bulk of the properties based in Ontario. The sale includes the flagship Toronto headquarters, Royal Bank Plaza, but does not affect stand-alone branches owned by Royal Bank.
The sale of the properties will result in a gain of approximately $340 million ($180 million after-tax). Of this amount, approximately $97 million, pre-tax, will be recognized in the fourth quarter ending October 31, 1999 and the bank plans to use this gain to increase its general loan loss provisions, consistent with its conservative risk recognition strategy. The remaining gain will be deferred and amortized over the approximately 10-year average term of the leases.
-IE Staff
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